Home Mortgage Rates, Best Home Mortgage Rates, Lowest Mortgage Rates

Basics Of Applying For a Home Mortgage

When you go into your lending institution, ready to finalize the paperwork on your home mortgage, what should you have ready?  What needs to be done before you ever walk into that door?  In the past home mortgage lenders would mail out verification to the borrower’s employer, banks, other home mortgage companies, insurance company, among others.  This would be done to verify the information supplied by you on the home mortgage application.  Now things have been streamlined to move faster.

A more common procedure these days is something called “alternate documentation.”  This means that the home mortgage lender can use your responses and accompanying documentation as the verification.  This allows your home mortgage to be processed more quickly without so much waiting around.  Instead of waiting around for weeks for the verification to come in, more trust is placed on your documentation.  Verifications are still mailed by the home mortgage company but that is mostly a quality control procedure.

To provide proof of your income, expect to bring in multiple forms.  Some of these you may need to go to your employer for.  You will need at least the past two years W2 forms; you may still have these in your tax records.  Keep your pay stubs to cover at least a 30-day period; this will establish your ability to pay your home mortgage right now.  If you are retired, you will need a Pension Award letter and Social Security Award letters if you get Social Security.   Two past federal tax returns may be required if you meet a few extra conditions.  These include being self-employed or if you own rental property.  These documents are probably the most important part of getting your home mortgage and a low mortgage rate.

If you have any assets, the home mortgage company will want to know about that too.  Provide statements for at least two months on all bank accounts, stocks, mutual funds, and bonds.  Obtain a copy of your latest 401k statement, or any other retirement asset you may have.  If there are any large deposits you will need to explain them or risk not having your home mortgage approved.  Any money that will be coming to you as a gift for the home mortgage will need to be documented with a gift letter.  Keep in mind that printed copies of these documents will not be accepted by a lot of lenders, you need something with your name, the account number and the institution’s name.

Any negative items on your credit report should be reported to the home mortgage company now.  Otherwise you will likely get higher mortgage rates.  Any late payments, recent credit inquiries, charge-offs, collections, judgments, and liens need to be explained.  Also if you have a bankruptcy within seven years, provide that paperwork as well.  Bring all of this with you and you should have no problem finalizing your home mortgage loan.

Home Mortgages and Down Payments

When you are preparing to buy a home, you usually are not thinking of a down payment.  Before you even consider answering an ad or going to an open house you need to think about a down payment.  Knowing how much money you have to work with will affect every other decision you make when getting a home mortgage.  It will affect and determine everything from your purchase offer, the home mortgages you qualify for, and even how you hope for home mortgage interest rates.

Take a look at your savings and your disposable income.  You know your financial status better than anyone, so this should not take long.  Determine how much money you have to work with that you could put toward a down payment and closing costs on a home mortgage loan.  If you have limited resources, or if you are getting part of the down payment as a gift, your home mortgage options will be very limited.  The same is true if you have enough for a down payment but need the lender to cover some of the closing costs, your options will not be very good.

The rules are different if you are borrowing the down payment from your 401k or retirement account.  The home mortgage options will vary based on the lender you choose, but they probably will not be all inclusive.  Really the only way to have unlimited choices in a home mortgage program is to have enough money for a large down payment and closing costs.  In this case you can choose from fixed rate loans, adjustable rate loans, buy downs, graduated payment mortgages and all the varieties in between.

Another important reason to have an inkling of an idea about a down payment is when you are shopping for mortgage interest rates.  Some home mortgage lenders will charge a higher interest rate for a smaller down payment.  The mortgage interest rate will vary enough as it is, you should be as close as possible on this to get a closer estimate.  Not only will you have different mortgage interest rates for fixed rate and adjustable rate loans, but also within those categories the different home mortgages will vary with the rate

If you are shopping mortgage interest rates over the phone, the loan officer will be able to tell you what you qualify for if you know how much of a down payment you have.  They will also be able to quote you the right rates.  Shopping mortgage interest rates online is also an option, and you have to know what home mortgage programs you qualify for.

It will affect how you write you purchase offer as well.  You are required to put down your down payment when writing the offer and different home mortgage programs will have different rules as to how that affects your offer.  Down payments are very important to your home mortgage, so being prepared is in your best interest.

How Mortgage Interest Rates Work

If you are considering a home mortgage, chances are that you woke up today and wondered what the mortgage interest rates would be if you signed on the dotted line.  It seems like an easy question to answer, when in reality it isn’t quite as simple as knowing one rate.  There are multiple rates and while the rates may be very similar, even identical, with each lender there is no guarantee. Not just that, the rate may change before you has driven to the bank anyway.

So where does a mortgage interest rate start?  It begins with the fax machine in your home mortgage broker’s office.  Every morning they will receive a fax that lists the day’s rate.  On very active days it is not unusual to see this rate change several times throughout the day.  There have been times when the rate has changed up to five times a day.  These rate sheets are not for the public to see.  They display only the rate that the loan officer is going to be paying more that home mortgages, not the cost presented to you.

The different rates have different costs.  Higher mortgage interest rates won’t cost as much to the loan officer as a low mortgage rate would.  This is due to the fact that the lender will earn more in interest on the home mortgage if the mortgage rates are higher.  On the other side, it makes sense to charge more for a low mortgage rate since the lender will earn less interest in the long term.  In some cases the home mortgage is considered to have a “rebate.”  If the mortgage interest rate is high enough the loan officer will get paid back for issuing the loan at that rate.

A large majority of home mortgage lenders are paid on commission.  The lender and the loan officer split whatever amount is earned off the home mortgage loan.  So before quoting you a mortgage interest rate the loan officer will add in the amount that they want to earn.  The individual company will have a policy on how much or how littler can be added.  While this reigns in the loan officer, it still gives them a lot of flexibility with the mortgage interest rate.

In this way, it may seem that the loan officer’s goal would be to get you the highest rate possible.  To some extent, this is true.  But home mortgages are still a business and like any good business they do not want to overcharge their customers either.  Your credit score will determine the amount of flexibility you get with the mortgage interest rate.  The better your score, the more likely it is you will get a lower rate.

Tips For Refinancing Your Home Mortgage

With mortgage loan rates at record lows its no surprise that mortgage refinancing is at a peak.  Recently mortgage refinance applications hit the highest level in more than 5 years.  While some may be able to turn this into huge savings, that is not true for every borrower.  The last thing you want to do is get taken advantage of with a raw deal.  There are several things you should know about the mortgage refinancing process before putting in an application.

If the mortgage interest rate is at least one percentage point lower than your current one, mortgage refinancing will likely work in your favor.  It’s still important to analyze your financial position to be sure, but it’s worth considering under these circumstances.  Also consider the fees associated with a mortgage refinance.  The higher the fee, the more it will cut into any savings you get.    You need to make sure the fees are low enough that you will earn that money back in a reasonable amount of time, usually a few years.

Be aware of the rejection rates for mortgage refinancing.  Through the first months of 2008 only slightly more than half turned into loans.  That means about half of the applicants took the time and money and ultimately stayed in the same position they were in before.  The criteria for mortgage refinancing is getting stricter as the months go on so the number of rejected applications will likely only increase.

It has long been accepted that a great FICO score to have for refinancing is 720 but this is no longer true.  Your credit score is everything when it comes to refinancing your home mortgage.  Currently the lowest rates are available only to those with a 740 FICO or higher.

Know your options for paying fees.  There are generally three ways to do this.  If you have enough cash you can just pay the fees up front.  More commonly accepting a higher interest rate will pay the mortgage refinance fees.  Or you can tack the fees onto the principal of the home mortgage.  Take to your home mortgage lender about which option will work best for you.

Because the lending standards are getting tougher by the day you may have to get used to being told no.  However, even if one lender has told you no that doesn’t mean they all will.  A home mortgage lender will not some and find you, you have to find them.  Research the rates online, call the different lenders and find yourself the best mortgage rates.

Types of Home Mortgages

In years past there were only a few types of home mortgages that one could apply for.  Times change and so does the home buying market.  Now it seems there are more types of home mortgages than you could possibly know what to do with.  You will have to choose just one for your home purchase so it’s best to least which is which now.

Fixed mortgage rates are probably the most popular and the longest standing.  Fixed rate home mortgages are available in terms from ten years all the way up to fifty years.  The payment is structured in such a way that as long as the exact payment is made, the loan will be paid in full after the term ends.  This type of home mortgage will also allow you never worry about your mortgage interest rate.  It will remain the same no matter what the rest of the financial market does.

The government insures FHA home mortgages.  The government uses its mortgage insurance to fund the loan.  This type of home mortgage is perfect for first time homebuyers.   It is one of the only loans on earth where your credit score doesn’t matter and the down payment requirements are quite minimal.

VA home mortgages are available only to veterans that have served in the U.S. Armed Services.  In certain cases, they can also apply to spouses of deceased veterans.  Requirements will include the year of service and the status of the veteran’s discharge.  These requirements do change and vary by the home mortgage company.  VA loans also do not require a down payment.

Adjustable rate home mortgages come in the most variety of all the different loan types.  You can find an adjustable rate home mortgage in any size, shape, or color you could possibly want.  It is usually identical to a fixed rate home mortgage except that the interest rate changes.  It can fluctuate annually or semi-annually.  Or, more commonly, it will remain fixed for a period of time before it starts to adjust with the market.

The final of the most common home mortgage types is an interest-only loan.  Using that name is a bit misstated.  It seems to imply that the borrower only pays interest on the home mortgage.  Interest only loans do contain an option to make an interest only payment, but this option is available only during a certain period of time.  Some junior home mortgages are truly interest only and require a balloon payment.

These are the types of home mortgages that you will be offered most often in the current financial market.  Knowing which of these you’d most like to get can be helpful later in the application process.